Impact Investment for Skills Creation Report
The European Training Foundation and the EC's Joint Research Centre (JRC) have published a new joint report: Exploration of impact investment for skills creation - Existing actions, emerging trends, implementation modalities, best practice.
A subheading reads: A case study with relevance to the Western Balkans Region.
Impact Investment for Skills Creation
The report explores how to use impact investing to fill the gap in skills development in the region by redirecting (or reinforcing) investment in SMEs and their skills ecosystem.
The report identifies the persistent brain drain, the absence of incentives for investment in human capital, the lack of skills and capacities as major obstacles for innovation. This is particularly important for the creation and growth of innovation-driven SMEs in the Western Balkans.
The discussion and awareness about impact investment in the region appear to be highly limited. There is a need for developing new (financial and capacity-building) instruments to promote and spur impact investment.
This could ensure sustainability in the skills creation and retention process. In turn, this may result in reducing the brain drain and supporting the creation of high value-added jobs.
Key takeaways
The report concludes that
there is an urgent need for developing new instruments (both financial and capacity building ones) to promote and spur the impact investment in the WB region, so as to ensure sustainability in the skills creation and retention process.
Also, the Western Balkans
needs to further build and enhance relevant skills and competences for a twin green and digital transition and to recover from COVID 19’s economic consequences.
The report underscores that impact investing does not work if its ecosystem is not ready. Therefore, capacity building and pilot initiatives in the region should be designed to encourage stakeholders' involvement in innovative initiatives.
Need to mix existing and new instruments
The report finds several existing instruments that could be helpful in the process of tapping into the existing potential.
- InvestEU can offer a framework to accelerate the development of human capital for innovation. InvestEU combines the European Fund for Strategic Investments (EFSI) with 13 centrally managed EU financial instruments into one instrument.
- Social Outcome Funds can support skills development accelerating the introduction and growth of a social impact investing market in the region and, mainly Social Outcome Contracts (SOCs).
- Revisiting and enhancing current financial instruments. One of them is the Western Balkans Investment Framework (WBIF) which enhances access to finance for SMEs via bank loans at improved conditions and access to targeted equity investment.
In addition to the existing instruments, the report maintains that
new instruments also will have a role to play in developing an impact investment market to support skills development in the Western Balkans.
Chiefly, the Economic and Investment Plan for the Western Balkans that offers many new opportunities for the region. Also,
- tailor new financial tools to the skills needed,
- insist on strategic planning and monitoring,
- introduce specific measures for SME training.
The report concludes that impact investment can play an important role in two fields. One, skills development and retention in the region, and two, supporting the creation of high-value jobs. The key precondition is tackling the above challenges successfully.
The annexes to the report provide an overview of successful practices identified in the EU Member States and investment instruments for skills development in the Western Balkans such as:
- Western Balkans Fund (WBF)
- Western Balkans Enterprise Development & Innovation Facility (WB EDIF)
- EU4Tech PoC WB project
- Regional Challenge Fund
- European Institute of Innovation and Technology
- European Investment Bank (EIB)
- SEAF South Balkan Fund
- European Bank for Reconstruction and Development (EBRD)